The Russian Federation Council Approves Forex Law

As expected, the Federation Council, the upper chamber of the Russian parliament, has approved today the much-awaited forex law during the closing session of 2014. The law, officially presented as "Amendments to Certain Legislative Acts of the Russian Federation," is meant to establish a regulatory framework for trading in the OTC market in Russia.

Starting from October 2015, all existing and new brokers would have to obtain a license by a Self Regulated Organization (SRO), which will be operating under government supervision. After January 2016, brokers without a license will be forced to shut down.

The bill outlines the limitations brokers will be facing, most notably the Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term ratio they can offer, set between 1:50 to 1:100.

Another major point worth mentioning is that CFD and binary options trading has not been included into the bill in any form. Therefore, depending on interpretation of the law, a binary options broker could offer services in Russia without a license. Also, foreign firms are not governed by the new laws. But there is market speculation that Russian lawmakers may apply measures to limit trading with unregulated foreign brokers such as warnings or blocking websites. With the structure of the law providing flexibility, however, guidelines towards CFDs, binary options and foreign brokers can easily be changed in the future.